Murtha-tied contractor CEO enters fraud guilty plea

July 14, 2009

PENSACOLA, Fla. (AP) — The former chief executive of a defense contractor with ties to Rep. John Murtha pleaded guilty in federal court Tuesday to a kickback scheme and defrauding the Air Force, and promised to cooperate in an ongoing criminal investigation.

Federal prosecutors said Richard S. Ianieri solicited kickbacks from a subcontractor in Pennsylvania while he headed Coherent Systems International Corp. Ianieri also was charged with filing false purchase orders related to an Air Force contract in Florida.

Ianieri pleaded guilty to both charges during a hearing in Pensacola and is scheduled to be sentenced in September. He could face up to 15 years in prison.

A nine-page plea agreement that Ianieri signed says the government will urge a lighter prison sentence if he provides substantial assistance “in the investigation or prosecution of other persons who have committed offenses.”

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Following Ianieri’s plea, Murtha spokesman Matthew Mazonkey said it is not the congressman’s job to oversee companies and that “if they broke the law, then they should be held accountable for their actions.”

Murtha, D-Pa., has directed hundreds of millions of dollars in government contracts over the years to Coherent and other defense contractors through a process called earmarking.

“This case isn’t about earmarks,” said Mazonkey. “It’s about individuals within the defense industry and the Defense Department accused of defrauding the government.”

Executives at Coherent and two other companies named in court papers in Ianieri’s Florida case have donated over $95,000 to Murtha’s re-election campaigns and his political action committee since 2002, according to Federal Election Commission records.

One of the companies is Kuchera Industries Inc. of Windber, Pa., about 10 miles from Murtha’s political home base of Johnstown.

A felony information filed in Pittsburgh states that Ianieri was given two kickbacks totaling nearly $200,000 from a company identified only as “K” for “improperly obtaining and rewarding favorable treatment” regarding a defense subcontract.

In an April 2006 news release, Murtha announced that Coherent and Kuchera Defense Systems were working “virtually as one company” on 14 contracts worth $30 million to develop high-tech military gear.

Kuchera’s offices were raided by federal agents in January. Kuchera built high-tech military components that Coherent designed.

The Florida charges concern a Coherent contract given through the Air Force Research Laboratory to deliver four Ground Mobile Gateway Systems, which are designed to help soldiers and pilots trace U.S. units and cut down on friendly fire.

The United States paid Coherent $5.9 million to build the systems. According to federal court papers, Coherent subsequently paid about $1.8 million to subcontractors for the delivery of software and materials that were not part of the contract.

Ianieri was charged with presenting purchase orders to the Air Force that he knew were “false, fictitious and fraudulent,” court records state.

Murtha also has ties to lobbyists for some of the companies under scrutiny. His brother worked from 2004 to 2006 for KSA Consulting, of Rockville, Md., which lobbied for Coherent. Another lobbying firm, PMA Group, represented two of the companies involved in the Florida investigation.

Founded by a lobbyist who has long been close to Murtha, PMA and its defense contractor clients have donated over $2 million to Murtha’s re-election campaigns and to his political action committee over the years.

Ianieri’s attorney, W. Thomas Dillard, of Knoxville, Tenn., declined to comment after the hearing. He would not address questions regarding whether Murtha had sponsored an $8.2 million earmark that included the money for Coherent. Murtha’s spokesman also has refused to say whether the congressman was the sponsor.

Dillard also refused to say whether his client could implicate Murtha or other members of Congress in allegedly illegal conduct.